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The race for the new chair of the U.S. central bank is heating up, and one name is gaining significant traction: Kevin Hassett. He is already a close ally of Donald Trump and played a central role in shaping his crypto policy. Now, he is considered the top contender to succeed Jerome Powell.
Hassett is known as a pronounced pro-crypto advocate. Simultaneously, Trump appears to be searching for someone who shares his vision for lower interest rates. The combination of these factors makes this potential appointment particularly significant, especially as the Federal Reserve seems more unsettled internally than it publicly projects.
Hassett as Trump’s Confidant #
Kevin Hassett currently leads the National Economic Council, where he also oversees the White House’s digital assets team. That team presented a report last summer with recommendations for crypto regulation.
The report included rules for banks as well as for stablecoins. This makes Hassett one of the most crypto-experienced candidates ever considered for the position of Fed Chair.
He previously indicated that if Trump were to ask, he would say “yes” without hesitation. According to insiders, Trump and his advisors are primarily looking for someone who will actively support his desire to cut rates faster and more deeply. Hassett recently said on television that he would “already be cutting” because, in his view, the economic data provides the room to do so.
However, there are caveats. Analyst Neil Dutta expects that Hassett may struggle to get other policymakers within the central bank on board with his aggressive rate-cut vision. This could lead to internal tensions, especially given Trump’s reputation for direct interference with the Fed.
The Fed is Creaking, and Bitcoin Reacts #
The battle for the new chair comes at a time when the Fed appears jittery. Recent minutes reveal that the central bank is much more nervous about the economy than it shows publicly. Analysts point to stress in the money market and banks increasingly needing liquidity late in the day. These are early warning signs that the financial system is tighter than expected.
On top of that, the Fed will stop further reducing its balance sheet starting December 1. This will leave more money in the financial system, which is often beneficial for crypto as it increases liquidity.
Yet, the growing stress in the money market could also lead to cautious investors. Recent price movements in bitcoin show that the market is closely monitoring these contradictory signals.